First of all, let’s get a few common misconceptions out of the way. USDA loans are NOT just for low-income buyers and small priced homes that are way out in the country on a farm. These shared beliefs make USDA loans probably the most misunderstood and underutilized home loans around. On the contrary, perhaps a majority of American families and properties qualify for this no money down purchase loan. Earlier this year, it was announced that USDA income limits for 2018 – 2019 have increased. So, just because the program has “Rural Development” in the name, do not discount the power of this powerful home loan!
USDA Loans Benefits
- Credit scores down to 620
- Use higher appraised value to finance closing costs
- Seller may pay up to 6% of the price in costs
- First-time buyer or subsequent buyer
- Flexible income limits
- Stick built homes, off frame modular, townhomes, approved condos
- May own another home over 1 hour away
- Biggest is NO DOWN PAYMENT!
USDA Income Limits 2018 – 2019
On June 13, 2018, USDA Rural Development increased USDA income limits for all U.S. counties. This means that more buyers fall within the household income threshold. The key word in that sentence is “household.” Rather than just the buyer(s) meeting the income limit, any income derived from household members 18 or older must be included. Even if an 18-year-old son or daughter who will occupy the home, works at McDonald’s part-time, this income must be included in the household income.
For Section 502 USDA Guaranteed loans, income limits are divided into groups. These groups are 1 – 4 and 5+ household members. Therefore, each county has an income limit for families with 4 or fewer people. Then, each has a limit for households with 5 or more people. For a majority of U.S. counties, USDA loan income limits are $82,700 for 1 – 4 household members and $109,150 for 5 or more. That isn’t low income! But, what if you still make over the limit for your household size? Find out tricks to exceed limits further down in this article!
How Much Did USDA Income Limits Increase?
Last year, the standard income limits were $78,200 for 1 – 4 person households which means 2018-2019 is a $4500 increase. For 5+ person households, the limit increased by $5,950 from a prior level of $103,200. This could make a big difference. For instance, buyers under the new limit could use a no money down USDA loan, but buyers over the limit may have to put down 3%, 3.5%, or 5% on other mortgage programs as a minimum to purchase a primary residence.
How to Exceed USDA Income Limits
Even though there are limits, there are exceptions to the rules. The USDA income limits can be increased for any household size by the following:
- $480 for each child under 18
- Documented child care expense
- Full-time college students 18 or older
- Disability expenses incurred
- Medical expenses for elderly or disabled
There are rules for using each of the above, and our loan officers can determine if an exception could be used.
USDA Property Eligibility
In addition to increasing the USDA loan income limits, USDA recently announced that property eligibility areas have changed. There are not many changes, and still, most of the country is eligible. To qualify for a USDA loan, the property must be occupied as a primary residence as well as being located in an eligible area. Do you want to see if there are USDA eligible homes in your area? Click on the link below or contact a loan officer now.
USDA Higher Income Limit Areas
As mentioned above, most counties have the household income limits of $82,700 and $109,150, but there are some counties or areas that have higher limits. Basically, these areas are considered higher housing costs and income levels, so USDA makes an allowance for this. Below are counties or areas with higher income limits in states we cover.
|1-4 Person||5+ Person|
|High Income Area||Household||Household|
|West Palm Beach||92,950||122,700|
|Hilton Head Island||83,000||109,550|
|King and Queen County||86,950||114,750|